by Diana Mandia

(Reuters) – European stocks ended lower on Thursday, with the exception of London, as the European Central Bank (ECB) announced another rate hike and its president Christine Lagarde dismissed any impending pause in the market. monetary policy tightening.

In Paris, the CAC 40 lost 0.51% to 7,290.91 points and the German Dax 0.13%. The British Footsie advanced 0.34%.

The EuroStoxx 50 index ended down 0.25%, the FTSEurofirst 300 0.09% and the Stoxx 600 0.13%.

The ECB raised its interest rates by a quarter of a point on Thursday, as expected by the markets, an eighth increase in a row which did not prevent the Frankfurt institution from leaving the door open to others, despite signs of economic weakness in the euro zone and the beginning of a slowdown in inflation.

The ECB judges that inflation will remain above its target of 2% until 2025 inclusive.

“The slight upward revision to the ECB’s inflation forecast supported expectations of further tightening,” said Massimiliano Maxia, senior rates strategist at Allianz General Investment, adding an additional 25 basis points. are “more than some in July”.

The ECB’s monetary policy decision comes a day after the US Federal Reserve announced a pause in the cycle of rate hikes, but its chairman Jerome Powell used a tone deemed “hawkish”, warning of the possibility two additional rate hikes by the end of the year.

VALUES

In stocks, online fashion retailer ASOS climbed 14.7% after reporting a return to profitability in the third quarter, while H&M was upbeat for June after sales fell in the three months to at the end of May, rose 5.3%.

In the process, the European distribution compartment posted a gain of 0.32% on Thursday.

The rate-sensitive tech sector, on the other hand, lost 0.59%, while basic resources lost 0.34%, hurt by the decline in metal prices due to weak data on industrial production and retail sales in China.

In Paris, Lagardère lost 2.04%, while the European competition authorities are investigating the conditions under which Vivendi (+0.1%) completed the takeover of its competitor.

In Zurich, SoftwareOne jumped 18.6% after a takeover offer of 2.9 billion Swiss francs (2.96 billion euros) formulated by Bain Capital Private Equity intended to delist the Swiss services group computers.

The VAT group fell 4.3% after announcing a reduction in the working hours of its employees, a decision which will preserve its margins but sends a negative signal on the state of demand.

AT WALL STREET

At the time of closing in Europe, the New York Stock Exchange had turned up, the Dow Jones taking 1.01%, the Standard & Poor’s 500 0.74% and the Nasdaq Composite 0.58%.

Despite opening in the red, large caps finally benefited from the release of solid economic indicators and the decline in US government bond yields.

THE INDICATORS OF THE DAY

In France, INSEE published on Thursday the final figures for the consumer price index (CPI) for the month of May, confirming an initial estimate of 5.1% year-on-year, with in particular a drop in prices of energy and lower food price increases. The institute has also lowered its growth forecast for France for the second quarter, to 0.1% against 0.2% previously anticipated.

In the United States, several economic indicators point to the strength of the economy despite inflationary pressures and rising interest rates: retail sales unexpectedly increased in May, while weekly jobless claims remained stable.

CHANGES

The euro hit its highest level in more than four weeks against the dollar on Thursday after the ECB raised interest rates and announced likely future hikes.

The euro is trading at $1.0931, while the greenback, which was rising mid-session supported by Fed statements, turned down (-0.6%) against a basket of currencies. reference.

RATE

The yield on ten-year German government bonds climbed six basis points to 2.504%, after peaking at 2.548% earlier in the session following the ECB’s announcements. The yield on the two-year German Bund, particularly sensitive to changes in interest rate expectations, gained 13 basis points to 3.17%.

In the United States, ten-year and two-year Treasury yields fell more than five and three basis points to 3.73% and 4.66% respectively, as investors digested Thursday’s economic data and the fallout from the Fed announcements the day before.

OIL

After Wednesday’s pullback, oil prices rose on Thursday, buoyed by a weaker dollar and rising Chinese refining activity despite lackluster economic data out of China.

Brent fell 2.92% to 75.34 dollars a barrel and US light crude (West Texas Intermediate, WTI) lost 3.09% to 70.38 dollars.

TO BE FOLLOWED ON FRIDAY:

The final inflation figures for the euro zone for the month of May will be published on Friday.

(Written by Diana Mandiá, edited by Blandine Hénault)

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